Unspoken Rules of Home Buying
Buying a home represents the largest purchase the large majority of us will ever make, which means you can never educate yourself enough about the process and its numerous pitfalls. Here are some tips to protect yourself and your investment.
1. Never buy the most expensive house in a neighbourhood
When you browse a neighbourhood’s MLS listings, have you ever noticed there is always the huge two-storey house with a pool at the end of a crescent as the highest listing in the area? That’s because the house isn’t selling and if you decide to buy it, you’ll be the one in a few years who isn’t able to get rid of it. Let me use an analogy, people always say that if you’re trying to get better at hockey, then play with people who are better than you. This principle can be directed applied to homes and its neighbourhood. If you were to take a house a $500,000 house in Elmvale and move it 2 km west into Alta Vista, that exact same house would now be worth at least 15-25% more. Now consider that nice home that is the outlier in its area. It suffers from the opposite effect, meaning it loses much of its potential value simply due to being surrounded by lower end homes.
2. Importance of always checking the public property records
Never forget, at any cost, forget to do your homework on the public property records of any property you’re simply considering for purchase, beyond the data displayed on MLS. Most of these records are fairly accessible, usually on provincial websites or local libraries, but others require lengthy but essential sleuthing through court records to acquire. These public records disclose information such as property deeds, encumbrances, seller tax records, conditions of past sales, etc. This will inform you about the conditions and historical data of the property, among other information contributing to your purchasing decision. Always, and I repeat always check the property records of your potential future homes because you never know what you’ll come across. Visit https://www.thebalance.com/how-to-search-property-records-1798771 for more information on how to search for these records.
3. Never pay a premium for a pool
Pools may seem fun and exciting, but in reality, they’re high on the list of top household hassles. Most people love the aquatic freedom and the party hosting potential of a pool, but I would absolutely never buy a house with a pool. In fact, surveys indicate most homeowners agree with my opinion. When you consider how much time and financial resources they require to simply maintain, the reasoning becomes clear. A recent study actually showed that if two houses were identical, the only difference being a pool, the house without the pool may in fact sell for less than the one without a pool. Of course they are great for 3 months out of the year and your kids are going to love you for getting one, but it doesn’t change the fact that concrete pools have an average annual maintenance cost of 10% to 15% of its initial cost (i.e. $20,000-$30,000). The point remains that if you’re looking for a house with a pool, use it as a negotiating point to drop the price rather than a reason to spend more.
4. Optimize your credit
Almost every home buyer requires a mortgage loan to finance their purchase because few currently have sufficient liquid capital reserves to fund their future home’s sale price. There are a multitude of key factors involved in understanding the complex mortgage process, including the credit scoring system(s). If you’re interested in learning the truths about the credit-mortgage industry, its practices, and how to benefit financially broken down into steps, then stay posted to the blog because I will be sharing a comprehensive mortgage acquisition guide in the next few weeks. See you then!